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examination and statement of accounts and of other documents connected with accounts by persons who have had no part in their preparation. Systems of financial inspection have long been used, especially in connection with public accounts. In Italy the elaboration of commerce considerably increased the duties of an auditor in the late Middle Ages, but the auditing of business accounts did not become common until the 19th cent., when there were an increasing number of businesses continually growing in size and complexity. Corporate charters usually came to be granted only on condition that licensed experts conduct annual audits. Such audits are particularly useful to the owners (partners or stockholders); executives (managers, officers, and directors); creditors or prospective creditors (investors, note brokers, and commercial and investment bankers); and receivers, trustees, and creditors' committees of a business. Audits are also useful to the vendors of a firm's merchandise, the owners of patents and other recipients of profit shares or royalties, governmental regulatory bodies, and prospective donors to institutions. An audit settles certain categories of questions. It must determine whether all assets and liabilities shown are actual, and that they are properly incurred, valued, and recorded. A check must be made of the surplus, income, and capital-stock accounts, verified by the examination of the authorizations for stock issues and by comparing the amounts issued with the amounts authorized. Finally, auditing constitutes an independent check on the tendency to overstate assets and understate liabilities. The duties of auditors have even expanded into a comprehensive survey and analysis of the entire conduct of the financial and accounting branches of an enterprise. Thus the auditor needs, in addition to his knowledge of accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
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, a broad understanding of business and finance. The accountant records the facts of a business; the auditor must determine whether or not such recording has been done accurately and honestly and then interpret and judge the facts, perhaps adding to his report recommendations for the future conduct of the business. In many countries, auditors are now established as a separate profession, requiring government licensing. In the United States, private audits are usually performed by certified public accountants; auditing of the federal government's accounts is conducted by Congress's Government Accountability Office (GAO). Formerly the General Accounting Office, it was established in 1921. The Internal Revenue Service periodically audits individual and corporate tax returns. The Public Company Accounting Oversight Board (established 2002) registers and regulates accountants and accounting firms that act as auditors.


See H. F. Stettler, Auditing Principles (3d ed. 1970); A. W. Holmes, Auditing (7th ed. 1971); V. B. Bavishi, International Accounting and Auditing Trends (1989); T. A. Lee, ed., The Evolution of Audit Thought and Practice (1989).

References in periodicals archive ?
Charles Bowsher, comptroller general of the United States and head of the General Accounting Office, said the passage of the Chief Financial Officers Act in 1990 brought federal agencies closer to meeting the same financial statement reporting requirements as public corporations and state and local governments.
General Accounting Office issued a revision to Government Auditing Standards (the Yellow Book), which included CPE requirements.
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As a result, Congress' General Accounting Office contends that Medicare is significantly overpaying for some medications.
General Accounting Office (GAO), Newborn Screening: Characteristics of State Programs, Washington, DC: GAO, 2003.
A 1999 report by the General Accounting Office found lax supervision in the program.
The General Accounting Office, Congress's investigative arm, says that not-for-profit and government-operated nursing homes had negative profit margins from Medicare in 1999, but had small profit margins a year later when Congress provided additional Medicare funding, which expired last October.
The General Accounting Office, Congress' auditing arm, found questionable credit card purchases at all the Air Force installations it looked at, including Edwards Air Force Base.
In a statement prepared for the Senate Finance Committee, the General Accounting Office discusses a number of private pension plan issues highlighted by the collapse of Enron.
While the Joint Financial Management Improvement Program-whose membership includes the Department of Treasury, General Accounting Office and Office of Management and Budget-has suggested that financial data should be exchanged using XBRL.
A General Accounting Office (GAO) report released recently underscores the urgent need for Congress to pass terrorism insurance legislation to avoid further economic disruption, according to The Real Estate Roundtable's president and COO, Jeffrey D.
The General Accounting Office (GAO) recently released a Report to the Chairman of the Senate Committee on Governmental Affairs, entitled Information Security--IRS Electronic Filing Systems.

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